GST on inbound tours: billing foreign tourists right

Say a French couple books a 12-day Golden Triangle-to-Kerala circuit through your agency and pays you in euros. You assume that because the money comes from abroad, in a foreign currency, for a foreign client, the invoice must be an export and therefore GST-free. It isn't, not for most inbound work, and that exact assumption is what shows up in GST notices to inbound operators every season.

For an inbound tour operator, the tax question was never where your client lives or what currency they pay in. It's where the tour is actually delivered. Get that place-of-supply logic wrong on your invoicing, and a season's worth of margin can disappear into a demand notice plus interest.

This is the reference for exactly that: when GST applies on tours billed to foreign tourists and NRIs, what the partial exemption for mixed India-abroad itineraries actually caps at, who legally counts as a "foreign tourist", and where the narrow export-of-services route genuinely applies.

Does getting paid in dollars make your tour package GST-free?

No. Foreign currency payment alone doesn't make a tour an export. Place of supply for a tour operator's services is where the tour is performed, and if that's India, you owe 5% GST on the full package value no matter what currency lands in your account or which passport your client holds. Tour operators pay 5% GST on inbound tours even when billing foreign tourists in foreign exchange, because the rule looks at performance, not payment.

This trips up inbound operators specifically because export-of-services logic gets applied by habit: dollar invoice, foreign client, so it must be zero-rated. That reasoning works for a software export or a consulting fee. It doesn't work for a tour, because the "service" here is delivered on the ground, in India, to someone standing in it.

Example: A German couple books a 10-day Rajasthan-Kerala circuit through your agency for a package value of ₹4,00,000, paid to you in euros. Every hotel night, every transfer, every guide is delivered inside India. Place of supply is India, so you charge 5% GST on the full ₹4,00,000, that's ₹20,000, regardless of the currency they paid in or where their money originated.

Who legally counts as a "foreign tourist" under this rule

A "foreign tourist" for this purpose is a person who isn't normally resident in India and is staying in the country for six months or less, for reasons other than employment. That's a specific, narrow test built into the exemption rules, and it doesn't turn on passport colour or where the client's money comes from. The exemption applies to a person not normally resident in India staying six months or less for non-work purposes.

Two consequences follow directly from that test. A foreign passport holder who's in India on a long posting, a work visa, or an extended family stay past six months doesn't meet the definition, even though they're clearly not Indian. And an NRI on a short leisure trip, someone with an Indian passport or OCI who lives abroad and is visiting for a fortnight of sightseeing, arguably fits the spirit of the rule better than a foreigner who's settled in for a year of work in Gurugram.

If your client is an NRI, the honest answer is: check the stay duration and the purpose of the visit, not the passport. A short NRI holiday that otherwise looks like any other inbound tour should be billed the same way as a foreign tourist's tour. A foreign national on a long work assignment should be billed like any other domestic client, with no special treatment either way. As of July 2026, this is the test practitioners are applying; rules change, so confirm the current wording with your CA before you rely on it for a borderline case.

Your itinerary spans India and abroad: how the 50% exemption works

When a foreign tourist's itinerary combines a leg inside India with a leg outside it, such as Delhi-Agra followed by a Dubai stopover, the foreign leg can qualify for a partial exemption. That exemption is capped at 50% of the gross tour value, no matter how the actual cost splits between the two legs. Mixed India-abroad itineraries for foreign tourists get partial exemption on the foreign leg, capped at 50% of gross tour value.

That cap is the part operators miss. It isn't proportional to what the foreign leg actually cost you to deliver, it's a hard ceiling on the invoice.

Example: The same German couple adds a 4-night Dubai stopover to their trip, and the combined package value is ₹5,00,000. Even if the Dubai leg genuinely accounts for 60% of your costs, you can only treat 50% of the gross value, ₹2,50,000, as exempt. GST at 5% applies on the remaining ₹2,50,000, that's ₹12,500. Where the actual cost split is close to the cap, run the numbers past your CA before you invoice.

GST treatment by client type and itinerary: quick reference

Use this as the first filter before you invoice a foreign or NRI client. Confirm current rates and the exemption's exact wording with your CA; this table reflects the position as of July 2026.

Client type	Itinerary	GST treatment
Foreign tourist (≤6-month stay, leisure)	Entirely inside India	5% GST on the full package value
Foreign tourist (≤6-month stay, leisure)	Mixed India + abroad legs	5% on the India leg; up to 50% of gross value can be exempt
Foreign tourist, ground arrangement performed wholly outside India	Entirely outside India	May qualify as export of services, billed via LUT, subject to conditions
NRI or foreigner staying beyond 6 months, or on a work visa	Any	Doesn't meet the "foreign tourist" test; bill as you would any other client

When does inbound work actually qualify as an export of services

Rarely, for a pure inbound operator, and only when the logic behind the place-of-supply rule flips in your favour. If performance is what fixes place of supply, a service performed wholly outside India, for a recipient outside India, paid for in convertible foreign exchange, starts looking like a genuine export rather than an inbound tour.

In practice this shows up for DMCs and inbound agencies that also run outbound-style ground arrangements. Say an overseas travel company contracts you to handle just a group's Dubai stopover, and no leg of that specific engagement touches India. That slice of work can potentially be billed as an export of services, using a Letter of Undertaking (LUT) to invoice without charging GST upfront, instead of collecting the tax and claiming a refund later.

Careful: this is a narrow, fact-specific call, not a general escape hatch for inbound billing. If any part of what you're delivering happens on Indian soil, that portion reverts to the 5% inbound rate regardless of who's paying or in what currency. Confirm the export classification with your CA before invoicing a single rupee at zero GST; misclassifying export status is exactly the kind of thing that draws department attention to the rest of your invoices too.

Getting ITC back when you subcontract to another tour operator

If you subcontract ground handling in each city to a regional DMC or tour operator, you can claim input tax credit (ITC) on the GST that supplier charges you, even though you're on the 5% scheme that otherwise blocks ITC on hotel bills and air tickets. Tour operator services at 5% get no ITC on hotels or air tickets, but GST charged by another tour operator in the same line of business is creditable. The carve-out is narrow: it only applies when your subcontractor is itself invoicing you as a tour operator, not as a plain hotel, car rental, or transport vendor.

For a typical inbound circuit, that covers most of your city-to-city cost: Delhi ground handling from one DMC, Rajasthan from another, Kerala from a third, each invoicing you with GST. If each of those suppliers genuinely operates as a tour operator rather than issuing a room-only or car-only bill, the GST on their invoice becomes your credit. If you're deciding whether the 5% no-ITC scheme or the 18%-with-ITC scheme suits your inbound book better overall, the 5% vs 18% ITC decision walks through the arithmetic on both sides.

Common questions

Is GST payable on a tour package paid in foreign currency?

Yes, if any part of the tour is performed in India. Currency of payment has no bearing on place of supply; only where the service is delivered decides the tax treatment, so a dollar or euro invoice for an India-based itinerary still attracts 5% GST on the India portion.

What if my client is an NRI, not a foreign passport holder?

Check the stay duration and purpose of the visit, not the passport. An NRI on a short leisure trip who stays six months or less for non-work reasons meets the "foreign tourist" test and gets the same treatment as any other foreign tourist; one settled in for a longer stay or a work assignment doesn't, and should be billed as an ordinary client.

Can I use an LUT to bill zero GST on inbound tours?

Only for the specific portion of your work that's a genuine export, meaning it's performed wholly outside India for a client outside India, paid for in convertible forex. Any leg delivered on Indian soil still attracts 5% GST regardless of an LUT covering other invoices, so treat this as a narrow, CA-confirmed exception rather than a general billing shortcut.

Do visa and flight charges to foreign clients follow the same rule?

No, they run on separate rules. Visa facilitation charges typically fall under the pure agent rule for visa fees, and if you're building out the rest of your invoice, the GST rate card for tour operators is worth pinning alongside this post. If you've already received a notice questioning any of this, a travel agency's response playbook covers what to do next.

The short version

• Foreign currency payment doesn't make a tour GST-free. Place of supply, where the tour is actually performed, decides the tax, and for tours performed in India that's 5% regardless of the client's passport or currency.
• A "foreign tourist" is defined narrowly: not normally resident in India, staying six months or less, for non-work purposes. Long-staying NRIs and foreign workers don't qualify for the special treatment.
• Itineraries mixing India and abroad legs can exempt the foreign portion, but the exemption is capped at 50% of gross tour value, not the actual cost split.
• Genuine export-of-services billing via LUT applies only when your work is performed wholly outside India for a client outside India, paid in convertible forex. Any India-based leg still attracts 5% regardless.
• Subcontracting ground handling to another tour operator lets you claim ITC on their GST invoice, even under the 5% no-ITC scheme, but only if that subcontractor is itself invoicing as a tour operator.
• Rates and thresholds here reflect the position as of July 2026. Confirm current figures with your CA before you invoice a borderline case.